Question

Read “Why GDP Fails as a Measure of Well-Being.” The article talks about the weaknesses of GDP as a measure of well-being and discusses several alternatives. Choose one of the alternative metrics discussed in the article, explain what it is and why you believe it would be a better measure of well-being.

Answer 1

GDP Measures the production of goods and services during the accounting year. But if someone falls ill, and he gets treatment from the hospital, then we will see the rise in GDP. Thus, such a measure of GDP would indeed not increase well being of people.

The service provided by the households at home is not counted in the calculation of GDP. Such problem is abundant in developing countries. Most of the production of goods and services are not marketed. Thus such production of goods and services is not counted in the GDP. GDPs are underestimated in the developing countries. GDP can not be right measure of well being in these countries. These non marketed goods and services also must be included in measurement of GDP. If these are included in GDP, then it would be right measure of well being.